Friday, March 11, 2016

A uniquely American artform

Americana: money and banking.
 Note, the earlier post about the reduction in demand for investment and the increase in supply of savings, suggest that the Fed may not be able to control real interest rates.



1 comment:

  1. Dr. Froeb,

    Kudos to the team that produced that video. As to its question of how long will interest rates stay low, I’d have to say that the interconnectedness of the global economy, the conflicting strategies being discussed by the Federal Reserve compared to other leading central banks, and an uncertain domestic political forecast past January 2017 isn’t helping us answer that question.

    While our Federal Reserve just raised the funds rate at the end of 2015, and many observers another one or two rate increases this year, other central banks have been toying with negative interest rates to nudge spending over savings.
    As our interest rates rise in relation to others falling, our producers will find it a bit more difficult to sell abroad. Since trade is an issue which has been, and I suspect will continue to be highlighted by various Presidential candidates for the remainder of this election cycle, it might be less palatable for the Fed to more as quickly as some might like to move rates up.

    Thanks,
    Tim Dunn

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